Investors sue Hims & Hers after FTC lawsuit plummets stock price

Stock prices dropped 15% after the FTC sued the online wellness company in July, accusing it of sharing health information with advertisers like Meta and Snap.SAN FRANCISCO (CN) — Investors claim in a Tuesday class action that telehealth giant Hims & Hers failed to warn them the company was engaging in deceptive business practices that ultimately triggered a federal lawsuit — and a substantial drop in stock value.Lead plaintiff Hemalatha Velanki says in her 26-page complaint Hims & Hers made misleading statements about the company’s financial status.“These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the company and its financial well-being and prospects, thus causing the company’s securities to be overvalued and artificially inflated at all relevant times,” she writes.Hims & Hers advertises itself as an online wellness platform where patients can pay directly for prescriptions such as birth control and hormone replacement treatment, and to treat common ailments such as anxiety, hair loss and erectile dysfunction after a brief consultation with a provider.The company’s stock value dropped by almost 15% after the Federal Trade Commission announced its lawsuit during trading hours on July 29.“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages,” Velanki writes.The FTC accused Hims & Hers of sharing consumer health information with third-parties like Meta and Snap. The regulatory agency also claimed the company engaged in deceptive advertising practices and failed to disclose it charges customers for prescriptions after they submit an intake form, even though the company claims the customers can consult with a medical provider before being charged.Hims & Hers denied the FTC’s accusations in a social media statement after the agency’s lawsuit, saying “This is not enforcement grounded in consumer protection; it is an effort to generate headlines at our expense."The investors claim Hims & Hers violated the Securities Exchange Act and Velanki seeks the court to rule it a proper class action and compensatory damages. She also demands a jury trial.A potential class for the action is any investor who purchased Hims & Hers securities between August 4, 2025 and July 29, 2026.The August 2025 date is significant, Velanki says, because the company submitted its quarterly report for a period that ended in June to the Securities Exchange Commission. The quarterly report claimed that Hims & Hers “developed and maintain policies and procedures to protect” private health information, “including the adoption of administrative, physical and technical safeguards.”“It also purported to warn of risks which ‘could’ or ‘may’ negatively impact the company, including risks related to the ‘use, disclosure, and other processing of personally identifiable information,’” says Velanki.The company sent other quarterly reports in November, February and May, saying the same thing, Velanki claims.In a May report quarterly report, the company added a brief explanation of the FTC’s concerns. In October 2023, the FTC issued a “Civil Investigative Demand” to the company, requesting information regarding its privacy, advertising, and cancellation practices as a part of a Restore Online Shoppers’ Confidence Act investigation. And in April 2026, the company reported it was in settlement talks with the FTC.In response to a Courthouse News request for comment on the securities lawsuit, a Hims and Hers spokesperson said in an email, “We will vigorously defend ourselves against these follow-on claims, which rely on the same flawed allegations advanced in the government’s lawsuit.”Hims & Hers CEO Andrew Dudum and Chief Financial Officer Oluyemi Okupe are also named defendants in the complaint.An attorney representing Velanki did not immediately respond to a request for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads